Q: Reader Suzanne Herman, who says she’s Canadian with U.S. citizenship, submitted this question: “What clever way could one avoid paying U.S. capital gains on the sale of a real estate, and still retain the capital gains exemption on the sale of a principal residence in the country where one lives?

There are a number of ways to optimize one’s tax situation with respect to capital gains on the sale of a residence overseas, though individual circumstances will dictate whether any of these methods can be used, and many are applicable to domestic residences as well. From a U.S. tax standpoint, all of the following will apply: